Abstract:
The distributive trades sector, which is primarily accounted for by wholesale and retail trade, is not only economically important in its own right, but also relevant to monetary policy. Ultimately, it is retailers who set the actual prices of most consumer goods. They are the main interface between producers of consumer goods and consumers, with around half of private consumption accounted for by retail trade. The “value added” of this intermediation service can be substantial, as this accounts for, on average, about 25% of consumer prices. The purpose of this report is to analyse the structural features of the distributive trades sector and the developments within it, as well as how these may influence prices and price dynamics. This report contributes to a better understanding of the impact of the structural features of the distributive trades sector on prices and price-setting behaviour, thereby improving on previous research in this area. From a policy perspective, it highlights the importance of structural reforms that help enhance competition in this sector. This report uses a wide range of data sources – some of which are unique – to study an area that has been under-investigated, especially at the European level. There is, however, ample room for further research in this direction.